UW Today

May 12, 2014

Washington housing market weaker in first quarter of 2014

Runstad Center for Real Estate Studies

A house for sale.Washington state’s housing market finished weaker in the first quarter of 2014 when compared to the end of 2013, according to the Runstad Center for Real Estate Studies at the University of Washington.

“The housing market is still suffering from low inventory,” said Stephen O’Connor, director of the center. “This is evidenced by decreased sales volume and by an overall decrease in available listings.”

Existing home sales declined 12.1 percent in the first quarter, which is a 7.1 percent decline from the first quarter in 2013, for a seasonally adjusted annual sale rate of 81,450 homes. This means that if the sales rate for the quarter continued for a year, that number of homes would be sold. Most economic statistics are reported at seasonally adjust annual rates, but these are not forecasts of future activity.

Compared to a year ago, the statewide median home sales price increased 8.2 percent and now stands at $248,900. This is down 3 percent from the fourth quarter of 2013.

First-quarter home sales 2014, from UW Runstad Center for Real Estate Studies

Runstad Center for Real Estate Studies

Metro areas such as King and Pierce counties showed 9 percent and 12.8 percent increases, respectively, in median sales price over the same time in 2013. But median prices were lower than last year in 16 of Washington’s 39 counties, with prices in Lewis and Whitman counties at least 13 percent below last year.

Local median home prices in the state are highly variable, ranging from $70,000 in Lincoln County to $419,000 in King County.

Housing affordability for all buyers statewide ticked upward to 152.6 from 149.4 a quarter ago. This metric suggests that a middle-income family could afford a home selling for 52.6 percent above the median, provided they have a 20 percent down payment and enter into a 30-year mortgage at prevailing rates.

Statewide, the first-time buyer index showed a small gain of 1.8 points, ending the quarter at 85.3. An index of 100 would mean that a first-time home buyer has enough income to buy a starter home, or one at about 85 percent of the median price for the state.

“Low supply and slowly increasing interest rates continue to make it difficult for first-time buyers to be competitive in the market for starter homes, especially in and around Seattle,” said George McGilliard, president of Washington Realtors, which produces home sales statistics in partnership with the Runstad Center.

Housing affordability varied widely across the state. The least affordable county is currently San Juan, with an all-buyer index of 87.7.  Conversely, homes in Lincoln and Wahkiakum counties offer the most affordability, registering values of 404.4 and 387.9.

For first-time buyers in metropolitan areas, Benton County (the Tri-Cities area) was again the most affordable and King County the least affordable.

Each quarterly release coincides with information from the National Association of Realtors regarding median home prices by metropolitan area.

Final numbers on supply constraints, prices, building activity and more will be released next month in the center’s full Washington State Housing Market report.

Sales, median home prices and affordability data for all Washington counties are available at the Runstad Center’s website.

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For more information, contact O’Connor at 206-685-9989 or steveoco@uw.edu.

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